[Good Morning Market] Overinvestment in Ukraine and the Reinterpretation of Economic Outlook

Due to the sharp rise in international oil prices, gasoline prices at gas stations nationwide continued to increase for the fifth consecutive week. According to Opinet, the oil price information site of the Korea National Oil Corporation, the nationwide gasoline retail price in the third week of this month recorded 1,718.4 KRW per liter, up 26.6 KRW from the previous week. The rise in international oil prices is attributed to strong U.S. oil demand and escalating tensions between Russia and Ukraine. Oil price information is displayed at a gas station in downtown Seoul. Photo by Mun Ho-nam munonam@

[Asia Economy Reporter Hwang Junho] On the 21st, various news related to the conflict between Russia and Ukraine is expected to act as downward pressure on the stock market. However, the fact that the reality of the U.S. monetary policy normalization, which had been pressuring the market, has become somewhat certain, along with expectations for reopening, is anticipated to have a positive impact on the market.

Lee Kyung-min, a researcher at Daishin Securities, stated on the 21st, "The escalation and easing of the Ukraine situation cannot be seen as the key variable determining the fluctuations in the current financial market," adding, "The market is currently over-immersed in the Ukraine issue."

He continued that U.S. January retail sales and industrial production recorded surprises, and after the release of the January FOMC minutes, the probability of a rate hike has also decreased. However, the Ukraine issue plays a role in diminishing the positive impact and amplifying the negative impact, according to his explanation.

As he mentioned, on the 18th, the U.S. stock market (Dow -0.68%, Nasdaq -1.23%, S&P 500 -0.72%, Russell 2000 -0.92%) fell again, and this week is likely to be another challenging week.

Seo Sang-young, a researcher at Mirae Asset Securities, said, "Although the possibility of armed conflict continues to spread over the weekend, if it is not a full-scale war, the impact on the financial market could be limited, so the likelihood of widespread concern is not high." He added, "The Korean stock market started with a decline of about 0.5%, and changes due to the Ukraine issue are expected. Rather than active responses, a stock market driven by factors affecting individual stocks is anticipated."

Han Ji-young, a researcher at Kiwoom Securities, forecasted, "The Korean stock market is expected to continue a phase of increased volatility due to geopolitical risks," adding, "However, the presence of relief factors such as strong expectations for full reopening and inflation peak-out is judged to support the lower bound of the index."

This content was produced with the assistance of AI translation services.